WELLINGTON NEWS

Hokitika Guardian, 8 September 1926, Page 4

WELLINGTON NEWS

BUTTER TRADING POLICY

(Special to “ Guardian.”)

WELLINGTON, September G.

A fashion has developed with respect to the past season's shipments of butter that "ill now be severely tested. A general policy of holding up supplies in cold storage has been pursued, the object being to secure the stabilisation of prices. It certainly can be claimed that during the past six months the London (imitations for choicest salted New Zealand butter have not varied much, but then only a proportion of the butter available has been sold. At the end of last month there were 650,000 boxes equal to 10.250 tons, and this quantity if not speedily cleared will exercise a depressing influence on the new season’s make which will soon be making its appearance on the market both from Australia and Xew Zealand. The position ns it stood eight weeks ago is disclosed in the dairy produce circular issued by Dalgety and Co., in which it i- stated that " in spite of the extreme dullness there ha.s been no serious reduction in prices for finest quality butters, which are at present much below those at this time last year. This may be accounted for by the fact that the major portion of New Zealand arrivals are placed in cold storage immediately upon landing, being limited in accordance with factories’ instructions, whilst supplies ol finest Australia are light. In the meantime the market is not starved for goods as a result of this holding up policy, because there is an adequate alternative, at present, in butter from the Continent, which is quite sulneienl to meet the reduced demand. Danish shipments continue heavier than usual, and the arrivals from Holland, Ireland. Sweden, the Baltic Stales. Siberia and Boland (comparatively new sources of supply) are increased.” The limits placet! on the butter have boon considerably over market values, and shipment after shipment have gone into store, so much so that it was becoming difficult to secure cold storage space. This policy on the part ol factories is pure speculation, and they must accept. the risks. In the wool season ol 192-1-25 quite a number ol growers declined to accept the very good prices that were offering them. AA lion the wool was eventually sold the price obtained was many pence h.luw the price originally offered ami refused. Specula t ion is best left alone to those who make a specialty oi speculation and who are front long experience more expert at making a reliable iorecast ol the movemnts oi prices. The dairy factories have not that knowledge or experience, and speculation on their part, is always a source of danger. However, speculation has been embarked upon and it is to be hoped that the stored butter will realise reasonably good prices. The manner in which shipment after shipment ha.s gone into cold store leads to the belief that the factories have been following a lead like sheep. FALLING PRICE? INEVITABLE.

In the report of the Imperial .Economic Commission there is evidence that the price level will he reduced by t'>e ’stress of competition. It is stated in the report that the British demand for butter and cheese was expanding, but there were indications that foreign countries were making considerable efforts to recover and improve llieir prewar trade position. Most likely in the next few years competition would be more severe, notably from the Argentine. Siberia, Russia and the Balkan States, where wages and the standards of living were relatively low. The report adds: "Our main conclusion that both at Home and overseas it will not be practicable to maintain the present standards of living among those dependent on the dairy industry, unless the farming interest, in order to meet such cutting prices as may come from increased competition, prepare,, without delay, for the adoption of more efficient and cheaper methods of production.” The farming interests have started to meet this competition by banding over their produce to be handled by a bureaucratic organisation in mass speculation by holding up supplies as a good many of Ihe factories have done i:i Ihe past season and regret in the cast few weeks.